Adapt or perish: How contractors can plot their courses through an uncertain market
Gettyimages.com/ ANDREY DENISYUK
By
Nick Wakeman
A panel of industry veterans points to technology pivots and partnerships as among their keys to thriving in a transforming landscape.
Government contractors need to embrace change like never before if they expect to succeed as the Trump administration reshapes GovCon landscape.
Changes have hit the market fast and furious since Jan. 20 and it doesn’t look like things will slow down anytime soon.
Contractors are facing “three S’s,” according to Mukta Pandit. She is CEO Safal Partners, a provider of education and workforce solutions: Scale, scope and speed.
“Change doesn’t scare us. Change is normal,” Pandit said. “But what I find unprecedented is the scale and how big the challenges are.”
Every aspect of the government and the contracting industry is being touched and that makes the scope immense, Pandit said. Then there is the speed of course.
The administration is “doing this at breakneck pace, with everything happening simultaneously,” Pandit said.
Pandit was part of a three-person panel hosted by the Greg and Camille Baroni Center for Government Contracting at George Mason University on March 17. Other panelists included Octo's founder Mehul Sanghani and Emily Murphy, a fellow at the center and former administrator of the General Services Administration.
One force for change is the Department of Government Efficiency, which is driving increased scrutiny of government spending and contracts. DOGE is also pushing cuts to the federal workforce's size.
Pandit’s company does a significant amount of business with the Education and Labor departments, which are two large targets for DOGE and especially Education.
“We’ve certainly been impacted,” Pandit said. But she knows her customers are being impacted as well.
“We are really empathetic with our clients. They are facing changes on a day-to-day bases,” Pandit said. “We are encouraging our teams to use their [emotional quotient] skills to anticipate what they need and support them.”
Sanghani may no longer be running a business day-to-day, but he remains plugged into a CEO network thanks to his years in the market. He led the growth of Octo and sale to IBM for $1.2 billion in 2023.
He stayed with IBM to help lead the integration until earlier this year.
“I feel like I’ve been a CEO therapist of sorts here recently,” he said when asked about the questions executives have for him.
“CEOs across the board are concerned about the impact of DOGE,” Sanghani said.
One bright spot is defense tech spending, which is not facing the same level of scrutiny as other parts of the budget.
Companies that have focused on services need to revisit their portfolios and look for ways to reposition themselves to align with the priorities of the Trump administration, Sanghani said.
He included large and small businesses in this call for reassessment.
“If your portfolio is focused on administrative support, legacy IT services, that necessitates a realignment," Sanghani said. "I don't think it's too draconian to go through and look at it on a contract-by-contract basis and look at ways that you can better position your value proposition to your customers."
Murphy said all the changes occurring across the market also represent an opportunity for contractors.
“You should tell your customers, this what we are delivering but we could do it better if we didn’t have these things holding us back or if you took a different approach, you could save money,” she said.
Contractors can provide insights on what costs the government money but doesn’t deliver value.
“Be a bit more offensive and say, ‘We’re your partner in this,” Murphy said. “We believe in this mission just as much as you do, and we wish we could do a better job for you and here’s how.”
Many companies, especially small businesses, are facing existential challenges of just surviving as they see contracts cancelled and others delayed.
Sanghani recommended a practice he followed at Octo of creating reports on projects that explained to the customer the value of the work.
Pandit also recommended a focus on outcomes rather than activities.
“What are we doing to support veterans? What are we doing to directly support the workforce? Not activities, but the results,” Pandit said.
Financial preparation is also crucial. Pandit and Sanghani both said that companies need to tap into established lines of credit so they have the resources to reposition the company.
The panel recommended five key strategic moves for companies:
- Pivot toward mission-critical areas
- Take a critical look at your portfolio
- Strengthen strategic partnerships
- Engage in acquisition reform
- Prepare for more tech disruption
Government contractors that can adapt quickly, demonstrate clear value and align with new priorities will likely find themselves well-positioned for success in this evolving landscape and period of significant change.
Follow this link to watch the panel in its entirety.